Chart Detail

Effect of the shift from labor to capital income on the top 1 percent of households, selected years, 1979–2007 (2011 dollars)

Row

1979

1989

1995

2000

2007

1

Total capital income (billions)

$611,633

$965,322

$878,675

$1,593,798

$2,008,466

2

Top 1 percent capital income (billions)

$242,550

$433,743

$414,063

$902,701

$1,323,836

3

Top 1 percent’s share of capital income

39.7%

44.9%

47.1%

56.6%

65.9%

4

Total household income (billions)

$5,139,775

$6,703,622

$7,446,395

$9,659,379

$11,220,480

5

Top 1 percent household income (billions)

$495,000

$857,200

$918,100

$1,706,430

$2,247,600

6

Top 1 percent’s share of total household income

9.6%

12.8%

12.3%

17.7%

20.0%

7

Capital income as a share of total household income (“capital share”)

11.9%

14.4%

11.8%

16.5%

17.9%

Counterfactual income, if 1979 capital share (11.9%) is held constant

8

Counterfactual top 1 percent household income (billions)

$495,000

$794,265

$921,038

$1,499,045

$1,871,366

9

Counterfactual top 1 percent share of total household income

9.6%

11.8%

12.4%

15.5%

16.7%

Source: Authors' analysis of Congressional Budget Office (2010)

Updated May 22, 2012

Documentation and methodology

Underlying data are from the Congressional Budget Office, Average Federal Taxes by Income Group, “Sources of Income for All Households, by Household Income Category, 1979 to 2007” [Excel spreadsheet]. The counterfactual holds the share of all income accounted for by capital income constant at its 1979 level. By implication, this means that all non-capital income sources rise over that time period (since overall income growth is assumed to remain the same). This extra non-capital income is distributed across income groupings in proportion to their actual income shares over time. Then the counterfactual income level of the top 1 percent is calculated and compared with actual trends. Data are inflated to 2011 dollars using the CPI-U-RS.